What is affiliate marketing?
Affiliate marketing is a process where companies (termed advertisers) allow marketers (called publishers) to send them potential customers and pay them for doing so. Although this can be done with traditional media, most affiliate marketing occurs online for two reasons. First, because that is where the majority of customers are spending their time. Reason two is because computers and online applications make it easy to track which publisher was responsible for which lead or sale.
Affiliate marketing benefits the advertiser because by paying commissions to affiliaites, they are recruiting thousands of sales people to sell their producsts. Because advertisers pay on a performance basis, they are able to get qualified prospects for a reasonable cost. The reason that the process works so well is because of Affiliate Networks.
Affiliate Networks makes money by putting the advertisers together with the publishers. Advertisers pay the networks to find affiliates to sell it’s products. The network in turn recruits publishers to sell those products and pays them a commission to do so. There are currently dozens of affiliate networks providing this service and as internet advertising grows, so will this type of marketing.
Although affiliate marketing is responsible for the sales of thousands of physical products, it is even more common with the sale of information and service products. One large category of these products are health products such as diet programs, weight loss programs and products, exercise programs, back care programs, smoking cessation programs, and skin care products.
In some cases, the affiliate is paid when a product is actually sold. For example, the retail giant Amazon has an affiliate program that will pay a publisher when he or she sends a customer to Amazon’s web site that results in a sale. The affiliate has a special code so that Amazon will know where the customer came from and Amazon will pay a commission. This is known as a CPC (cost per click) transaction.
In other cases, affiliates are paid for sending a qualified lead to a publisher’s web site. The affiliate may be paid $1.00 or $2.00 when a potential customer (prospect) puts their name and email, or perhaps name and address into an advertiser’s web site signup page. The publisher pays for the lead and hopes to turn the lead into a customer. Because the affiliate is paid for the lead, not the sale, this is known as CPA (cost per action).
Free trial offers are one of the favorites of CPA affiliate marketers. The advertiser creates a free trial offer for one of it’s skin care products for example. If the prospect provides their name and address, the advertiser will send a sample of it’s product. The advertiser knows that some percentage of free trial offers will create new customers. Affiliates advertise the free trial offer using a variety of traffic generating techniques and send propects to the advertiser’s web page. Each time someone signs up for the free trial offer, the publisher gets a commission.
Affiliate marketing, when done properly can be quite lucrative. There are those who have made millions of dollars in this industry.
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